In May 2016, Japanese consumer prices continued to fall and household spending declined again. The situation is pushing the BOJ to take additional measures to stabilize inflation.
Japan’s core consumer prices that exclude fresh food prices slid 0.4% on year in May for the third successive month, mostly due to the lower crude oil prices. The index matched economists’ estimates.
The average of household spending in Japan was down 1.1% on year in May. Households spent less on education, housing and travelling.
Analysts note that the figures indicate that the strategy of Prime Minister Shinzo Abe to revive Japan's economy proved ineffective.
According to Abe, inflation is crucial to economic growth. Economists say inflation would help to reduce Japan's public debt, which is the largest among developed nations.
The central bank said that reaching the 2% inflation target until the year that ends in March 2018 is impossible. It is not the first time the regulator postpones the time frame. Even after the BOJ introduced negative interest rates in January, prices keep falling.
The bank's next meeting will take place on July 28-29. Half of economists responded to a June survey by the Japan Center for Economic Research forecast the BOJ will further ease its ultra-loose monetary policy in July.
